The Tide of Consumer Influence Is in the Grip of Strong Undertow

ByLarry Kramer

January 13, 1980

The consumer movement has two goals for the 1980s: bringing to the public more information with which to make better marketplace decisions, and finding ways to increase the economic and political power of the purchaser. a

For the past two decades, consumer advocates have fought to make both government and industry and more responsive to consumer complaints and suggestions.

And, by and large, that effort has been successful. Major corporations now have consumer experts at the highest managerial levels who at the very least serve as a liaison between top management and the purchaser.

The government also has institutionalized the consumer advocacy function. Many federal agencies now have consumer offices and special funds to pay for advocacy groups to participate in regulatory proceedings.

Now it will be up to consumers to use these gains to their advantage, to parley their influence into better products and fairer prices.

But there are growing indications that the consumer incursion into the corporate and government process has reached its high point and that further advancement in that area will be hard to come by.

One has only to look at the whipping Congress has given the Federal Trade Commission, largely at the behest of lobby groups that have regrouped to stem the tide of consumerism that began in the 1960s.

Chamber of Commerce Regulatory Affairs Director Jeffrey Joseph has compiled a list of House of Representatives votes over the past decade that he says prove that support of key consumer legislation has been eroding.

He points out that in 1971-72 a bill to establish a new Consumer Protection Agency passed the House by 344 to 45 but was shelved in the Senate.

In the next Congress, the 93rd, a similar bill passed the House by 293 to 94, but again was shelved in the Senate. By the 94th Congress, the House vote for the agency dropped to 208 to 199, but despite Senate passage, it was vetoed by President Ford.

In the 95th Congress (1977-78), the agency bill was defeated in the House by a 227-189 vote, while an anti-consumer vote to strike a key class action provision from the FTC Improvements Act won by a 279-139 vote.

Finally, the vote in this year's 96th Congress to reauthorize the FTC with severe restrictions, including a congressional veto, passed by a resound- ing 321 to 63, the highest anticonsumer ballot of the decade.

"I think the record speaks for itself. There has been a steadily growing reaction in the Congress against the issues held to be important by consumer activists," Joseph said.

"The last couple of years have essentially seen a consolidation of gains made by consumers in the '60s," responds FTC Chairman Michael Pertischuk. "You had an outpouring of major legislation in the '60s, and the '70s really represented the shakeout of that new legislation. Some of you look over the decade, what you see are some very real gains in terms of consumer rights, government and corporate sensitivity to consumer needs."

Although he doesn't see any "quantum breakthroughs" in consumer rights in the coming years, Pertschuk does expect further realization of the gains that already have been made.

"For example, the automobile manufacturers know they are going to have to come to terms with warranty performance," he said. "Whether it comes through voluntary progress or through legislation, it is something the public has now come to expect."

Pertschuk thinks that the government's role in helping consumers will change in the '80s. "Government intervention will be more aimed at giving consumers the kind of information and the kind of practical rights to enforce their own interests and own choice rather than new elaborate schemes of government regulaton," he said.

The ability of consumers to obtain redress directly is one area Pertschuk sees improving in coming years. He said "the nature of regulation will move toward informatin disclosures, stimulating comparative advertising, such as energy labeling (that will show how much energy an appliance will use compared with similar products), rather than control regulation like the banning of products."

"Consumers will be more conscious of their own rights," Pertschuk added. "But you stil are going to need some intermediaries between very large and impersonal institutions -- whether they be large chain stores or large government agencies -- and consumers to help those consumers be heard."

"Consumers will be armed with far more information, and that's good," said White House Consumer Advocate Esther Peterson, who succeeded last year in sharply strengthening the role of, and funding for, consumer offices in all federal agencies.

"We're going to develop new tactics and new issues, even as we try to repel the business attacks on existing consumer and environmental regulation," said Mark Green, head of Ralph Nader's Congress Watch.

First off, Green said, "We are going to multiply the number of Congress Watch local offices around the country." He said the 20 or so existing offices have resulted in the congressmen from those districts voting for more proconsumer legislation.

But perhaps more of an indication of the direction in which the organized consumer movement is going is the Congress Watch plan to develop a "Corporate Democracy Act" and an "Audience Network." The latter will attempt to give citizen groups more access to prime-time television through ballot initiatives on what kind of programming should be shown during a special time allocated in local areas.

The other venture aims at making corporations more accountable and accessible to the public and to stockholders.

"Corporate crime will be an issue, and so will the growing power of corporate trade associations," Nader said.

Congress Watch is also encouraging creation of a public energy corporation to compete with the oil industry and, on the state level, supporting the creation of checkoff boxes on utility bills, which would make it easy for the public to funnel contributions to consumer advocates working on utility rate cases.

Green and other consumer advocates are very high on new telecommunications technology, which they see as creating a wide-open market for the dissemination of consumer information that has not been available on network programming.

Cable television systems, for example, now offer many consumer services like comparative pricing and how-to programming.

"Communications technology has led to a demand for new groups and new topics," Green said. "The explosion of channels has led to the airing of more issues. You no longer have to prove that a show can attract 34 percent of a market before you can put it on the air."

Nader agrees that cable television and other forms of improved communications will "vastly expand" the consumer's information base, but he said such new facilities should go far beyond consumer pricing and other basic services.

"We need the kind of programs where, for example, once a day on some cable channel throughout the country, there is an energy consumer actionshow where we can say, 'OK' today here's what the American Petroleum Institute did, and here is what Russell Long did, and this is what we've got to do,'" Nader said.

He sees better communications as a means of giving the consumer movement political punch on Capitol Hill. "Imagine the difference such programming could have made in Congress in the past. It could have been decisive on some votes. If people know what they are facing, they can do something to stop it," Nader said.

But the most important weapon the consumer may cultivate in the '80s is economic power. For the first time in history, there will be a Cooperative Bank, which will use $300 million in federal government seed money to offer traditional financing and credit services to cooperatives around the country.

Cooperatives are nonprofit businesses that are owned by their members. They were created to give consumers a chance to purchase the best possible goods for the smallest possible price. Owned by their members, cooperatives around the country sell food, health services, auto repair services, farm equipment and many other products.

Many cooperatives have found it difficult to gain the financing they need to operate from commercial banks, which would rather lend money to profitrate from commercial banks, which would rather lend money to profit-making ventures.

The Co-op Bank -- which reportedly will be headed up by outspoken consumer advocate and former Massachusetts banking commissioner Carol Greenwald -- should have adequate funding to support creation of several new cooperative ventures that must have an initial investment to get off the ground.

"The main thing we need to develop are instruments of consumer action, like these consumer co-ops," Nader said. "Consumers need economic power. More and more they are forming buyer clubs, where homeowners form service co-ops for plumbers, electricians and carpenters."

"Privately organized consumer muscle is the only answer," he added.

"Eventually the lawyers for consumer groups will sit down and renegotiate the installment loan contracts with Montgomery Ward or Sears, because you can't do that at point of sale," Nader contended.

"But there is no way Washington will be avoided as the battleground for consumer rights," Nader said. "We're not running away from Washington; we just have to have more muscle out there."